While May's away: Hammond leads cabinet reshuffle on Brexit policy

Theresa May was buying sunglasses in Italy, Boris Johnson was making jokes about boomerangs in Australia and Liam Fox was fending off questions about chlorinated chicken in Washington.

With MPs of all stripes jetting off for holidays and foreign trips to mark the official start of parliamentary recess this week, the political news was meant to die down.

But while the cabinet’s biggest Brexit supporters were out of the country, a significant development in the government’s EU policy has been emerging over the last seven days – spearheaded by the chancellor, Philip Hammond.

The first whiff of a new agreement between May and her ministers emerged last week when a cabinet source revealed there was “broad consensus” on seeking an off-the-shelf transition deal – effectively maintaining the status quo for around three years after Brexit.

The senior source argued a huge movement in the cabinet’s collective opinion in favour of a substantial transition period had occurred since the election, because ministers read the result as failing to endorse May’s plan for a hard Brexit.

However, the prime minister made no major policy speech setting out the new approach. Instead, she left the country on Monday for her three weeks of hiking holidays in Italy and Switzerland without mentioning any change in the government’s thinking.

Hammond wasted no time in filling that power vacuum, briefing business leaders about the details of the transition plan the UK would seek and appearing on the BBC’s Radio 4 Today programme to flesh out the details. He confirmed that the UK’s relationship with the EU could look “similar in many ways” until 2022 – despite formally leaving the bloc in 2019.

A series of cabinet ministers from Michael Gove to Liam Fox also confirmed they were relaxed about a lengthy transitional period of around three years, with continued free movement of people, single market access, a customs union arrangement and potentially oversight from a supranational tribunal structure.

As recently as 13 July, Fox had backed an implementation phase for Brexit of “a few months”. Ten days later, he acknowledged it could last until the next election in 2022.

While Hammond and Rudd were on the front foot, Johnson, giving a speech in Australia, appeared to have been caught unaware of the plans, saying he had not seen details of the new migration study because he had been travelling for a week.

Those fighting for a soft Brexit were perhaps the most surprised to hear Hammond and Rudd endorsing what they have been seeking ever since the referendum. Chuka Umunna, the Labour MP and leading member of the Open Britain campaign group, said it was “refreshing to hear government ministers facing up to the realities of Brexit at last” and acknowledged the chancellor and home secretary have “brought a welcome dose of reality to the Brexit debate”.

Nicky Morgan, the Conservative chair of the Treasury committee, was also satisfied, telling the Guardian: “I’ve been very clear we should be listening to what businesses are saying about the transitional period and I’m pleased the chancellor’s argument that jobs and the economy have to come first is being heard.”

And George Osborne, the former chancellor and now editor of the Evening Standard, appeared to take Hammond’s interview as a vindication of his own position from June that May’s government need the “political equivalent of the cold shower” and a “realistic assessment of Britain’s approach to the Brexit talks”.

Does Brexit mean Brexit? Gov position is as we predicted 2 months ago: no deal in 2019; no bespoke transition; EEA & customs union members pic.twitter.com/MYjO5QQeaC

Some Conservatives also read the situation as a sign of Hammond in the ascendancy. One senior Tory said: “There is no doubt Philip is feeling more confident about making the case for a good transitional deal and EEA-type arrangement. Amber is flexing her muscles as well.

“For the Brexit-supporting ministers, the ultimate goal ... is leaving the EU and they are realising that the way to do that – but not to so badly affect the country that the Conservative party is blamed – means there has to be some compromise.

“Frankly, it’s the tone of the argument the PM should have been making from last summer and we’d all be in a much happier place if she’d done that. But it’s taken the near miss of the election to mean she doesn’t have the authority, or rather Philip and others do have more authority. We are still leaving the EU but there is a much more realistic tone among key ministers.”

However, other pro-EU Tory MPs were suspicious about why the diehard Brexiters in cabinet, such as Fox and Gove, have accepted the plan – wondering what they have been promised in order to accept a substantial transition period. Certainly, the price of a transition deal giving certainty to businesses appears to be a guarantee that the UK will be leaving the single market and customs union after 2022 when “full Brexit” occurs.

“It seems odd that suddenly Philip and Liam are on the same page when it comes to a transitional deal. It makes one worried about what is coming after,” said a prominent former remain Conservative MP.

There were few murmurings of discontent from the vocal Conservative Brexiters on the backbenches. In the end, it was only Ukip claiming the transition plan was a “betrayal of proper Brexit”.

Bill Cash, the veteran Eurosceptic Conservative MP, told the Guardian that the crucial point about leaving the EU in March 2019 and moving to a transitional period was that this was when the UK would leave the jurisdiction of the European Court of Justice. Hammond appears to have accepted that principle when he suggested there could be a tribunal system to settle any disputes similar to the arrangements in place in European Economic Area countries such as Norway.

Vince Cable, the Lib Dem leader, was one of the only voices pointing out that a hard Brexit may be still on the way at some point in the future. “Philip Hammond is simply proposing to delay the car crash by another two years,” he said. “An extreme Brexit in 2022 rather than in 2019 is still an extreme Brexit.”